A potential $4,000 special CSLR levy for every adviser is expected to drive up advice costs and further shrink adviser numbers, according to a new survey by the FAAA.
Treasury confirmed last year that a $47.3m special levy will apply in the 2025-26 financial year to meet higher-than-expected CSLR claims, with advisers in the frame to pay more than 20% of it. The levy follows failures linked to the Shield and First Guardian Master Funds and consumer claims for their losses.
The FAAA’s member survey, carried out in March, found 90% of advisers believe the levy will increase the cost of advice. Seven in 10 respondents also believed the levy would contribute to a decline in adviser numbers.
…levy will be felt not just by advisers but also by consumers..
FAAA CEO Sarah Abood said: “The clear message from advisers is that the CSLR levy will be felt not just by advisers but also by consumers – through higher advice costs and reduced access to advice.
“The financial advice profession is made up primarily of small and micro businesses, with just over 15,100 advisers spread across 6,073 practices – an average of only 2.5 advisers per practice.
“We are already seeing signs that the levy is affecting both retention of existing advisers, and the pipeline of new advisers.”
The survey also found 69% of advisers expect the levy to have a material impact on profitability, including a third who forecast a hit of more than 10%.
See: Advisers Hit with CSLR Special Levy and Minister Flags Sweeping Reforms Amid Buckling CSLR
Almost four in five advisers who responded to the survey also said they planned to increase client fees to offset the cost, while 36% of practice managers expected to reduce new adviser recruitment.
The findings also pointed to further attrition across the profession, with 44% of respondents saying they knew advisers planning to leave because of the CSLR and 9% indicating they intended to leave the industry.
Advisers are pushing for changes to the CSLR scheme, with strong support for:
- Spreading special levy costs more broadly across the financial services sector
- Capping the advice sector’s contribution, and
- Reforming AFCA complaint rules relating to managed investment schemes and superannuation funds
Abood said advisers supported consumer compensation but believed the CSLR scheme needed to be “fair, sustainable and not undermine the ongoing viability of the advice profession”.
